EXAM 3 REVIEW SHEET
CHAPTER 19: Accounting
for Income Taxes
temporary and permanent differences when calculating taxes based on
financial income versus taxable income.
Know the four sources of temporary differences and the accounting treatment
of permanent differences.
Record transactions in the year of origin and in subsequent reversing
years for deferred tax liabilities and deferred tax assets.
Record transaction related to net operating losses (i.e., loss carrybacks and
loss carryforwards) using the back 2 / up 20 rule. You can ignore the use of
a valuation account for loss carryforwards.
20: Accounting for Pensions and Postretirement Benefits
Know the difference between a defined contribution plan
and a defined benefit plan.
Identify the types of transactions that affect the
pension expense account: service cost (amount will be given),
interest cost (calculated), amortization of prior service costs
(calculated), actual return on plan assets (amount will be given),
and unexpected gain/loss in current year (calculated) and/or
unexpected gain/loss (calculated using 10% corridor).
transactions related to defined benefit plans using the worksheet
approach for a single year . Know which accounts are reported
on the financial statements and which accounts
are not reported on the financial statements (i.e., "off-balance
You can ignore
CHAPTER 21: Accounting for
Know the advantages of leasing an asset as opposed to purchasing
You only need to need to know how to account for lease transactions
from the perspective of the lessee (i.e., you can ignore the
transactions recorded by the lessor).
Identify the criteria for determining whether a lease is
a capital lease or operating lease.
Know the components of the minimum lease payment
(basis for capitalization using present value tables).
accounting treatment of a guaranteed residual value and a bargain